Vietnam's Eximbank, 15.07 percent owned by Japan's Sumitomo Mitsui Banking Corp , is in talks with unlisted domestic lender Nam A Bank about a possible merger, sources with knowledge of the matter told Reuters.
The discussions come as Vietnam's central bank seeks to reform an overcrowded sector of more than 40 local lenders, many of which are considered by analysts to be under-capitalised and laden with bad debts that are dragging on the economy.
"The intention is there, but whether the banks would go ahead with the consolidation is still uncertain," said one of the sources who has direct knowledge of the talks.
Another source, a business analyst specialising in Vietnam's banking sector who has spoken to several people directly involved in the matter, said the talks had been going on for several months.
An executive from Nam A Bank, when asked to confirm the talks, said: "That content is not included in the agenda of the bank's annual general meeting next week." The person declined to be identified as he is not authorised to speak to the media.
Officials from Eximbank were not immediately available for comment.
Two former executives of Nam A Bank, who left their positions last month, are running to be board members of Eximbank, according to an Eximbank proposal published in March, which is subject to approval by shareholders at an annual meeting later this month.
The two people currently represent 20 percent of voting shares in Eximbank.
Both lenders are based in Ho Chi Minh City.
The central bank has said it expects six to eight mergers this year, while the long-term goal is to bring the number down to 15-17 lenders.
Earlier this month, Vietnam's unlisted Mekong Housing Bank said in a shareholder meeting document that it planned to work with BIDV, the country's second-biggest partly private bank by assets, to complete a merger plan this year.
Last month, the central bank approved a merger between unlisted Maritime Bank and Mekong Development Bank, while it acquired all the shares in Vietnam Construction Bank, based in Long An province, in February.
Other mergers in the works include Sacombank with Southern Bank, preparations for which began last year.